Fed's Jerome Powell: "We don't feel any hurry" to raise interest rates this year

Don't expect to see more interest rate hikes from the Federal Reserve anytime soon, Fed Chairman Jerome Powell suggested to "60 Minutes" in an interview that aired Sunday night on CBS. The frequent target of criticism by President Trump also said he can't be fired by the president and that he intends to serve out his full four-year term.

"Have you stopped raising rates?" Scott Pelley of "60 Minutes" asked Powell.

"We see the economy as in a good place," Powell responded. "Inflation is muted and our policy rate we think is in an appropriate place. So what we've said is that we would be patient."

"What does patient mean?" Pelley asked.

"Patient means we don't feel any hurry to change our interest rate policy," Powell answered. "What's happened in the last 90 or so days is that we've seen increasing evidence of the global economy slowing down, although our own economy has continued to perform well."

The Fed last raised its key interest rate to 2.5 percent Dec. 19, topping off three earlier rate hikes in 2018 as the U.S. economy produced strong annual growth of about 3 percent, exceptionally low unemployment beneath 4 percent and modest inflation of around 2 percent.

• Read the full transcript of the Fed Chairman Jerome Powell interview
  
• The Federal Reserve, 10 years after the Great Recession

December's interest rate uptick was a mere one-fourth of one percentage point, but already-shaky U.S. stock markets plunged on the news, with the Dow Jones Industrial Average tumbling more than 350 points. Wall Street boosters accused the central bank of being too focused on keeping the economy from overheating and stoking inflation. Too many rate hikes, Fed critics warned, risked pushing the country into recession.

The Fed's No. 1 critic weighed in on Christmas Eve as the stock market was suffering its worst December since 1931:

In the "60 Minutes" interview, Powell declined to share his thoughts on President Trump's criticisms of the central bank, long considered an independent entity that's supposed to make its decisions about interest rates and the money supply free of political influence.

"I don't think it's appropriate for me to comment on the president," Powell said.

"Can the president fire you?" Pelley asked.

"Well, the law is clear that I have a four-year term. And I fully intend to serve it," Powell said.

"So no, in your view?" Pelley asked.

"No," Powell answered.

The Fed still could raise interest rates later this year if signs emerge the economy is overheating and inflation is intensifying. That seems unlikely, however, judging by Powell's latest views on the economy that he shared with "60 Minutes."

• Are we headed into a recession? Not yet, Powell suggested: "I think growth this year will be slower than last year ... will continue to be positive and continue to be a healthy rate," he said. "Eventually, expansions come to an end. The business cycle has not been repealed. But I would say there's no reason why this economy cannot continue to expand."
  
• Is the 3 percent-plus growth we saw in 2018 the best we can do? Are the days of 4 percent growth over? Likely so: "Back when we used to have 4 percent and 5 percent growth years, the labor force was growing quickly — 2.5 percent, 3 percent in some cases back in the '60s and '70s," Powell explained. "We have an older population now. Our labor force is growing more slowly. It's growing less than 1 percent a year. So it's not likely that we could sustain the kinds of growth rates that we had when population and the labor force were growing more quickly."
  
• Would the Fed quickly raise rates if inflation surpassed 2 percent? Not necessarily: "I think we wouldn't overreact to inflation modestly above 2 percent any more than we overreacted to inflation modestly below 2 percent. I think we'll always be moving inflation back to 2 percent with our policy."
• Are American banks safe today a decade after the financial crisis? "The American banking system is much, much stronger and more resilient than it was before the financial crisis. Particularly the largest banks have double the amount of capital, which is to say resources to absorb losses."
  
• So a collapse of the financial system like we saw in 2008 cannot happen again? " 'Cannot' is a strong statement. You know, I would say our system is vastly more resilient."
  
• What keeps Jerome Powell up at night? One worry: The risk of hostile nations attacking our banking system through computer networks. "We devote large amounts of time and resources to protect the Fed but also to protect financial institutions and financial markets," Powell explained. "I would say for cyber risk, though, I've never felt a time when I think we're doing enough.…The kind of risks that we faced with the financial crisis were very real, but we know, I think in general, what to do there. Cyber is a relatively new kind of risk with nation-state actors. And it's one where the playbook is still being developed in real time."
  

The "60 Minutes" interview also reunited Powell with his predecessors at the Fed, former chairs Janet Yellen and Ben Bernanke. Both withstood withering criticism during their stints at the helm of the nation's central bank.

Asked by Pelley for their advice for Powell, Yellen said, "To be inclusive in decision-making, to bring many voices to the table, to listen carefully."

Bernanke cited a quotation on his desk from Abraham Lincoln: "To the effect that, 'If you're right, it won't matter what they say. If you're wrong, it won't matter what they say.' So the best thing to do is to make what you believe is the right call."

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• Ben Bernanke
• Jerome Powell
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• Federal Reserve